David1961
Thinks s/he gets paid by the post
- Joined
- Jul 26, 2007
- Messages
- 1,085
I currently have several mutual funds where my dividends and capital gains are being reinvested. I want to start taking some money out of these. It seems like the obvious way to do this is to start getting the distributions in cash for some of the funds. Then I got to thinking (maybe overthinking) about just redeeming a certain dollar amount of the shares periodically, while still reinvesting distributions. The advantage of doing this would be that I would know how much money I'd be getting and also can determine when. The downside would be paying capital gains on any gains depending on what my cost basis is. (of course, it could also generate a capital loss and I'd save on taxes). It makes sense to just start taking the distributions in cash. Are there any other considerations I haven't thought of? Besides what I mentioned, is there an advantage of periodically redeeming shares? For others that have been in my situation, do you have any recommendations?